One of Australia's richest businessmen, Paul Fudge, has snared a 10 per cent stake in AJ Lucas, extending his spread of shale and coal seam gas interests to Europe in the process.
Mr Fudge, through his privately held Pangea Resources, pocketed $660 million from the sale of a coal seam gas permit to Origin Energy in 2009. Since then he has extended his interests in the sector, as well as ploughing money into buying racehorses and establishing a stud on the Southern Highlands, south-west of Sydney.
Earlier this week, a Fudge-controlled entity, Belbay Investments, disclosed a 9.9 per cent stake in AJ Lucas, the troubled driller and contractor, which has its foot on potentially valuable coal gas and shale assets in Europe.
At Lucas' closing price on Thursday of $1.20, Mr Fudge's holding is worth $33 million. Prior to the recent placement and rights issue, Mr Fudge held about 2 per cent of the company's capital.
Mr Fudge was an underwriter of the retail investor component of AJ Lucas' $148.8 million placement and rights issue which was conducted last month.
That raising followed the sale of a 25 per cent equity in its potentially valuable Bowlands prospect in the UK to local utility Centrica, formerly known as British Gas.
That reduced Lucas' direct and indirect holding in Bowlands to 43.5 per cent, with Centrica to fund the next round of exploration on the Bowlands prospect.
The funds raised have helped recapitalise the Lucas balance sheet, which was under pressure since its drilling and contracting arms are losing money.
After making his money in textiles, Mr Fudge was an early mover into coal seam gas in Queensland, where he still has extensive acreage, as well as in the Northern Territory and NSW.
His NSW acreage is adjacent to AGL tenements at Taree on the mid-north coast, but onerous government regulation has locked much of this land up for the time being.
The share issue was priced at $1.20, a steep discount to its price of $1.60 prior to the issue, although since the issue was completed the shares have traded around the issue price.
Mr Fudge's emergence with a major stake in AJ Lucas comes as the UK Energy Secretary said this week shale gas could cut domestic gas prices by as much as a quarter.